Friday, September 14, 2012

Playing the stats game

The World Bank and UN reports celebrate a global success story: Between 1990 and 2008, the world cut by half the share of the world's really poor -- those living on less than $1.25 a day. And we achieved this goal five years ahead of the "Millennial Development Goal." Woweee! The following is taken from here.

How could the world have made huge strides against extreme poverty when, since the mid-nineties, the number of chronically undernourished people has risen to record highs -- now roughly one billion? Given that the poor spend at least half their income on food and global food prices have hit historic highs, how is it possible that poverty is truly decreasing? How could we cut the rate of dire poverty in half when at the same time we learn elsewhere that 71 percent of the world's people live in countries where economic inequality is worsening?

The bar for extreme poverty, $1.25, is even more dire than it appears. It's not set via international exchange rates -- which, say, in India would mean 69 rupees a day. Instead, the Bank uses what's called "purchasing power parity (PPP)," which in India amounts to only about a third as much. It comes to just 19.50 rupees for all daily needs -- enough to buy one meal in a Calcutta street market. "PPPs for individual household consumption," Professor Thomas Pogge, a philosopher at Yale and author of Politics as Usual, writes, under-rates the cost of food in poor countries "by about 50 percent on average."

Additionally, the World Bank and UN changed what gets measured to determine progress in overcoming world poverty: Pogge notes that the 1996 Rome Declaration -- the product of representatives of more than 80 countries convened by the UN's Food and Agriculture Organization -- promised to reduce, relative to 1996, the number of hungry people by half by 2015.

But in 2000, the Millennium Declaration, and the subsequent Millennial Development Goals, shifted the measurement from numbers of people to their share of the population affected. And this is a telling change, especially because poverty -- a root of hunger -- itself contributes mightily to population growth. So a poverty-spurred growth in numbers of people has, ironically, helped meet a poverty-reduction target measured by a decline in the percentage of people affected.

The advance-against-poverty picture looks quite different when using absolute numbers. World Bank statistics reveal that between 1990 and 2008 the number of people still in the below-$1.25 category has not fallen by half but by less than a third; and excluding China, the drop is an unimpressive 9 percent. Suddenly, it is much harder to celebrate.

The second goal-post fudge Pogge points out that while the Millennium Declaration adopted by the UN in 2000 makes that year its baseline, the eight specific Millennial Development Goals are measured against 1990. Starting the race in 1990 makes it possible to include the hundreds of millions of Chinese who officially escaped extreme poverty during the decade following.

Taking in twenty-seven years, from 1981 to 2008, we see that the number of people living below the still very miserly poverty line of $2.50 per person a day has increased by almost 8 percent to three billion. Outside of China, the number has grown by fully 32 percent to 2.4 billion.

The first target under the Millennial Development Goal #1, focusing on poverty, is to cut in half the percentage of hungry people hungry worldwide. At the 1990 starting line, 16 percent of the global population -- 845 million people -- officially suffered from hunger. As poor people were reeling from a doubling of the global Food Price Index between 2007 and 2011, the Food and Agriculture Organization estimated in 2009 that 1.02 billion, or 15 percent, were hungry. Even though, in 2010 its estimate fell back some, to 925 million -- that's still 13.6 percent of the world's people, far from the 8 percent that the Millennial target demands.

"Seventy-one per cent of the world's people live in countries where income inequality has been increasing," reports the Conference Board of Canada. These include "large-population countries like China, India, Russia, and the United States," it notes. Only 22 percent live in countries where inequality in decreasing. It may be statistically possible for income inequality to go up and poverty to go down (if the poor were joining the middle class while the rich were leaping even farther ahead of everybody). But that's not what we are seeing. In the U.S., for example, poverty and inequality are certainly spreading together. "The number of families in deep poverty grew sharply during the recent recession and its aftermath," writes Paul Tough in The New York Times Magazine, "and in 2010, the share of Americans whose families made less than half of the poverty line hit a record: 6.7 percent of the population, or 1 in 15 Americans."

In India, in early 2012, an official commission reported that the country's population below the official poverty line is now 30 percent, down from 37 percent in 2004-05. Given India's size, such improvement must have contributed significantly to the World Bank's positive claims. But, at about the same time we started hearing good news on global poverty reduction, the Times of India reported that "inequality in earnings has doubled in India over the last two decades, making it the worst performer on this count of all emerging economies." Plus, almost 42 percent of Indian children younger than five are underweight and almost 60 percent are stunted in height. Both estimates are much larger than the overall percent of Indians below the poverty line. How could there be so many more children suffering from obvious hunger than Indians in "official poverty"?

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